Is XPeng Fairly Priced After 22% Drop Amid Partnership Speculation?

• Thinking of investing in XPeng or just curious whether the stock is a bargain, overpriced, or somewhere in between? You’re not alone. Today we’ll break down what the numbers are really saying.
• XPeng’s stock has had a wild ride lately, shooting up an impressive 83.3% so far this year but tumbling 22.4% in just the last week.
• Recent news surrounding XPeng includes speculation over its partnerships in autonomous driving and electric vehicle subsidies in China, sparking debate on the company’s growth strategy. These headlines have fueled both optimism and caution among investors, helping explain the recent share price swings.
• On traditional valuation checks, XPeng currently scores 0 out of 6 for being undervalued. There is a lot to unpack in the valuation debate, but stick around because there’s more to understanding a stock’s value than just these numbers, and we’ll reveal a better approach by the end of this article.

XPeng scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: XPeng Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and discounting them back to today's value, reflecting both anticipated growth and the time value of money.

For XPeng, the latest reported Free Cash Flow was negative at around CN¥5.1 billion. Despite this, analyst forecasts suggest a dramatic turnaround, with Free Cash Flow expected to swing positive and reach approximately CN¥10.3 billion by 2027. Simply Wall St extends these projections further into the future, with estimates approaching CN¥15.6 billion by 2035. These numbers reflect strong anticipated growth, but they also depend heavily on assumptions that may not materialize in such a fast-changing sector.

Based on these projections, the model calculates an estimated intrinsic share value of $20.09. Compared to the current market price, this implies the stock is around 5.4% overvalued according to DCF methods.

Result: ABOUT RIGHT

XPeng is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for XPeng.

Approach 2: XPeng Price vs Sales

For companies like XPeng that are not yet profitable, the Price-to-Sales (PS) ratio is often used as a primary valuation tool. This metric helps investors estimate how much they are paying for each dollar of the company’s sales, which is particularly meaningful when traditional earnings metrics are not available.

The “right” PS ratio can vary depending on growth expectations and risks. Fast-growing companies or those with unique technology may command higher sales multiples, while increased competition or business uncertainty typically brings them down. Comparing with a company’s past ratios, industry averages, and closest peers can offer context but does not always capture the whole story.

Currently, XPeng trades at a PS ratio of 2.03x. That is much higher than the auto industry average of 0.80x and above the peer average of 1.43x. However, Simply Wall St’s proprietary Fair Ratio for XPeng, which incorporates factors like projected sales growth, risk, profit margins, industry trends, and market size, comes in at 2.01x. The Fair Ratio goes beyond simple comparisons by considering company-specific qualities that are often missed by looking just at peers or industry averages.

With XPeng’s actual PS ratio almost identical to its Fair Ratio, this suggests the stock is currently ABOUT RIGHT in terms of valuation on this multiple.

Result: ABOUT RIGHT

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1416 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your XPeng Narrative

Earlier we mentioned there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story about what XPeng is worth and why. It connects your assumptions about future revenue, profit margins, or risks to a fair value for the stock, turning all those numbers into a clear, actionable investment perspective.

Unlike static models, Narratives are interactive tools available in the Simply Wall St Community, where millions of investors build, discuss, and update their own outlooks as new information arrives. Narratives help you decide when to buy, hold, or sell by directly comparing your fair value to the current market price. As news or earnings change, both the story and numbers update automatically.

For example, one investor might believe XPeng’s international expansion and AI hardware will drive revenues toward the high end of analyst forecasts, justifying a fair value of $33.26 per share. Meanwhile, another might worry about competition and ongoing losses, setting their fair value closer to $18.27. With Narratives, you can see a range of possibilities transparently and make decisions that best fit your view and appetite for risk.

Do you think there's more to the story for XPeng? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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